The metaverse as the “successor state to the mobile internet”

Over the last couple of years, I’ve seen plenty of investors and analysts attempt to explain the concept of the metaverse. Is it virtual reality? An online platform for user-generated content? A digital marketplace? But I think one of the more elegant definitions came this week from Matthew Ball’s latest essay, A Framework for The Metaverse, which distills the metaverse down to a “successor state to the mobile internet.” It’s a good read, especially for newcomers to the topic who are curious about the future of the Internet—and the next wave of software and hardware innovation.

“Instead, we need to think of the Metaverse as a sort of successor state to the mobile internet. And while consumers will have core devices and platforms through which they interact with the Metaverse, the Metaverse depends on so much more. There’s a reason we don’t say Facebook or Google is an internet. They are destinations and ecosystems on or in the internet, each accessible via a browser or smartphone that can also access the vast rest of the internet. Similarly, Fortnite and Roblox feel like the Metaverse because they embody so many technologies and trends into a single experience that, like the iPhone, is tangible and feels different from everything that came before. But they do not constitute the Metaverse.”


What if the technology revolution is actually just beginning?

Back in Issue #10 of the Nightcrawler, I wrote a little about the eccentricity of James Anderson and his tenure at Baillie Gifford, the Scottish investment fund that has made some long-term bets on disruption and shares a similar ethos to our own firm. This week, the Financial Times published an excellent deep-dive on the employee culture at Baillie Gifford that has enabled them to think long-term about the future of technology, innovation, and much more. What I find so compelling about the firm’s thesis—and frankly an idea I agree with—is that we’re actually relatively early in the curve of the tech revolution of the 21st century. The next 10 to 20 years could result in some mind-blowing efficiency gains and innovation, which makes investing in this landscape so exciting—and challenging.

“Anderson’s bet on Amazon underlines the principles that have guided his decision-making — the idea that exponential improvements in technology will drive innovation; the contention that the vast majority of stock market returns come from a tiny percentage of businesses; and a relentless optimism about the future. The same philosophy informed his early and fierce backing for Elon Musk’s electric carmaker Tesla — in defiance of many sceptics. ‘James saw the likely extent of the technological change in the early years of the 21st century and backed it wholeheartedly,’ says Douglas McDougall, a former senior partner of the firm who hired Anderson in 1983.”


A key to long-term investing: Fight unfair fights

I enjoyed the conversation this week between Yen Liow, managing partner of Aravt Global, with Oxford University’s Alpha Fund. Liow covers a range of ideas, from the emotions of very public mistakes, short-term vs long-term investing, compounding returns, understanding the “right tail,” fundamental research, and so on. “If you are intellectually curious and competitive in nature, and like to be accountable for decisions of consequence, it’s an extraordinary industry,” he says of investing. (I agree.) One segment of the podcast that particularly stood out to me was Liow’s concept about investing in businesses that are so dominant—so powerful—that they essentially fight an “unfair fight.”

“One of the central premises of our business model: We don’t like competition. Competition is great for the consumer; it’s terrible for capitalists. So we try to find niches, and it depends on the size of the niche, but Google is another position we have. The niche is enormous, but it’s extremely hard to compete against Google. We don’t like fair fights. So if there’s one tag line you want to take away from our investment style, we only fight unfair fights. Our teams win constantly. And it’s not even close. We don’t like mano a mano situations in battles. That is a hellish place to try to compound capital over multiple decades. You want your teams turning up every day, [seeing] the whites of the eyes in the competitors, because we decide who to crush every day.”


A few more links I enjoyed:

“If you go back 40 or 50 years, it felt like the world was an unchanging place. I describe it as a fixed backdrop of a stage on a play. And the play took place in front of the backdrop. That is to say, we had the economic cycles and we had the corporate developments and all that kind of thing, against an unchanging backdrop. Today, the world changes every minute. So you can’t say, ‘I’m an investor and I exclude from my portfolios, the parts of the world that are subject to change.’ And once you stop saying that, you by definition get involved in growth and parts of the economy that are changing rapidly. That’s one of the key conclusions of that discussion.”
“So many people strive for efficient lives, where no hour is wasted. But an overlooked skill that doesn’t get enough attention is the idea that wasting time can be a great thing. Psychologist Amos Tversky once said ‘the secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours.’ A successful person purposely leaving gaps of free time on their schedule to do nothing in particular can feel inefficient. And it is, so not many people do it.”
“It’s another Karpathy line, but if you have a large, clean, diverse data set, and you train it on a big enough [neural] network, he quotes lya Sutskever: ‘Success is guaranteed.'”
“The scale of Kvashuk’s scheme, reported here in depth for the first time based on a review of thousands of pages of court documents and interviews with current and former Microsoft employees, investigators involved with the case, and Kvashuk’s family and friends, reveal a playbook that included computer hacking, Bitcoin rackets, and gift card arbitrage. At one point, Kvashuk, who didn’t respond to repeated requests for comment, was flipping so many 5×5 codes that prosecutors said he was singularly responsible for global fluctuations in the price of Xbox gift cards on reseller markets. When prices dropped too low, he’d withhold his supply in the hope the drought would push the market upward. ‘This was an old-school crime with a high-tech MO,’ says Michael Dion, the lead attorney in the government’s criminal case against Kvashuk.”

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